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The Northland Center

OFFERING MEMORANDUM

SANTA ANA, CA

CONFIDENTIALITY AND DISCLAIMER

The information contained in the following Marketing Brochure is proprietary and strictly confidential. It is intended to be reviewed only by the party receiving it from Marcus & Millichap and should not be made available to any other person or entity without the written consent of Marcus & Millichap. This Marketing Brochure has been prepared to provide summary, unverified information to prospective purchasers, and to establish only a preliminary level of interest in the subject property. The information contained herein is not a substitute for a thorough due diligence investigation. Marcus & Millichap has not made any investigation, and makes no warranty or representation, with respect to the income or expenses for the subject property, the future projected financial performance of the property, the size and square footage of the property and improvements, the presence or absence of contaminating substances, PCB's or asbestos, the compliance with State and Federal regulations, the physical condition of the improvements thereon, or the financial condition or business prospects of any tenant, or any tenant’s plans or intentions to continue its occupancy of the subject property. The information contained in this Marketing Brochure has been obtained from sources we believe to be reliable; however, Marcus & Millichap has not verified, and will not verify, any of the information contained herein, nor has Marcus & Millichap conducted any investigation regarding these matters and makes no warranty or representation whatsoever regarding the accuracy or completeness of the information provided. All potential buyers must take appropriate measures to verify all of the information set forth herein.

SANTA ANA, CA


Marcus & Millichap is not affiliated with, sponsored by, or endorsed by any commercial tenant or lessee identified in this marketing package. The presence of any corporation’s logo or name is not intended to indicate or imply affiliation with, or sponsorship or endorsement by, said corporation of Marcus & Millichap, its affiliates or subsidiaries, or any agent, product, service, or commercial listing of Marcus & Millichap, and is solely included for the purpose of providing tenant lessee information about this listing to prospective customers.

ALL PROPERTY SHOWINGS ARE BY APPOINTMENT ONLY. PLEASE CONSULT YOURMARCUS & MILLICHAP AGENT FOR MORE DETAILS.

NON-ENDORSEMENT NOTICE

Section 1 PRICING AND FINANCIAL ANALYSIS

Section 2 PROPERTY DESCRIPTION

Section 3 RECENT SALES

Section 4 IN ESCROW COMPARABLES

Section 5 ON MARKET COMPARABLES

Section 6 RENT COMPARABLES

Section 7 MARKET OVERVIEW

Section 8 DEMOGRAPHIC ANALYSIS

TABLE OF CONTENTS

The Northland CenterSANTA ANA, CA


PRICING AND FINANCIAL ANALYSIS

Price $7,500,000

Down Payment 44% $3,300,000

Price per Square Foot (GLA) $286.69

Gross Leasable Area (GLA) 26,161

Year Built/Renovated 1976 / 2001

Lot Size 2.9 Acres

Parking 152

VITAL DATA

CAP Rate - Current 5.82%

Net Operating Income - Current $436,631

Net Cash Flow After Debt Service - Current $210,312

Total Return - Current 8.82% / $290,916

CAP Rate - Pro Forma 6.72%

Net Operating Income - Pro Forma $503,894

Net Cash Flow After Debt Service - Pro Forma $277,575

Total Return - Pro Forma 10.85% / $358,179

1

Major Tenants


Tenant Name

YumYum Donuts

Acadmey of Dance

Farmers Insurance

Dentist

Back to Life Chiropractic

Kacy Nail and Spa

The Enlarger

Hair by Rubin


Major Employers

CompanyLocal

Employees

UCI Medical Center 4,763

Ingram Micro Inc 4,000

Irvine Medical Center 4,000

County of Orange 3,520

Octa 2,600

Think Together 2,503

Public Fclities Resources Dept 2,440

Santa Ana College 2,433

St Joseph Hospital of Orange 2,100

Tustin Unified School District 1,982

Alstyle AP & Activewear MGT Co 1,800

Pediatric Cancer Research 1,600

Demographics

This information has been secured from sources we believe to be reliable, but we make no representations or warranties, expressed or implied, as tothe accuracy of the information. References to square footage or age are approximate. Buyer must verify the information and bears all risk for anyinaccuracies. Marcus & Millichap is a trademark of Marcus & Millichap Real Estate Investment Services, Inc. © 2015 W0100377 Marcus &Millichap. All rights reserved.

1-Mile 3-Miles 5-Miles

2014 TotalPopulation

23,227 259,809 604,379

2019 TotalPopulation

23,306 261,603 616,515

2014 TotalHouseholds

7,926 75,981 166,978

2019 TotalHouseholds

7,942 76,719 172,113

Median HH Income $66,926 $58,845 $64,918

Per Capita Income(based on TotalPopulation)

$31,581 $25,296 $26,244

Average (Mean) HHIncome

$91,713 $85,047 $93,498

OFFERING SUMMARY

2

PRICING AND FINANCIAL ANALYSISThe Northland CenterSANTA ANA, CA

Existing FinancingLoan Amount $0

Loan Type Free and Clear


Proposed Financing

First Trust DeedLoan Amount $4,200,000

Loan Type ProposedNew

Interest Rate 3.5%

Amortization 30 Years

Program 3.75%, 5 year fixed, 30 year amortization

Loan to Value 56%

Due Date 10

Debt Coverage Ratio 1.93

FINANCING

3

Remaining: 23.96%

Academy of Dance: 19.76%

The Enlarger: 7.43%

Back to Life Chiropractor: 7.07%Smokes & Gifts: 6.29%

Aerus-Electrolux: 3.76%Rent Gaurantee: 3.76%

Kacy Nails: 3.78%Dentist: 4.25%

Rent Gaurantee: 4.30%Yum Yum Donuts: 5.03%Laura's Boutique: 5.28%

Rent Gaurante: 5.33%


Current Per SF Pro Forma Per SFReal Estate Taxes (1.0323%) $77,423 $2.96 $77,423 $2.96Insurance $13,496 $0.52 $13,496 $0.52CAM

Electricity $11,604 $0.44 $11,604 $0.44Sewer $3,503 $0.13 $3,503 $0.13Water $6,377 $0.24 $6,377 $0.24

Rubbish $9,600 $0.37 $9,600 $0.37

Landscaping $5,305 $0.20 $5,305 $0.20Repairs & Maintenance $14,139 $0.54 $14,139 $0.54TOTAL CAM $50,528 $1.93 $50,528 $1.93

Management Fee (% of EGI) $14,450 $0.55 $16,132 $0.62

TOTAL EXPENSES $155,897 $5.96 $157,579 $6.02


Tenants (% OF GLA)

EXPENSES

4


Current Per SF Pro Forma Per SFBase Rent

Occupied Space $436,566 $16.69 $530,346 $20.27

GROSS POTENTIAL RENT $436,566 $16.69 $530,346 $20.27

Expense Reimbursements

Real Estate Taxes $77,423 $2.96 $77,423 $2.96

Insurance $13,496 $0.52 $13,496 $0.52

CAM $50,528 $1.93 $50,528 $1.93

Management Fee $14,515 $0.55 $16,197 $0.62

GROSS POTENTIAL INCOME $592,528 $22.65 $687,990 $26.30

Vacancy/Collection Allowance (% of GPR) 5% / $26,517 $1.01

EFFECTIVE GROSS INCOME $592,528 $22.65 $661,473 $25.28

Total Expenses $155,897 $5.96 $157,579 $6.02

NET OPERATING INCOME $436,631 $16.69 $503,894 $19.26


Gross Leasable Area (GLA) 26,161 SF

INCOME & EXPENSES

5



TENANT SUMMARY

Suite Tenant GLA % ofGLA

LeaseCommence

LeaseExpire

MonthlyRent

Rent/SF

ExpenseReimbs. Options

2431 A-B Back to LifeChiropractor

1,849 7.07% 2/4/2002 M/M $2,403.70 $1.30 $739.60

2431 C Computer Store 960 3.67% 2/25/2015 4/7/2018 $1,440.00 $1.50 $384.002431 D Rent Gaurantee 984 3.76% 9/1/2015 8/31/2016 $1,476.00 $1.50 $393.60

2431 E-F The Enlarger 1,944 7.43% 11/5/2003 8/31/2017 $2,527.20 $1.30 $777.60

2431 G Spa Royal 960 3.67% 2/1/2015 1/31/2018 $1,250.00 $1.30 $384.00

2431 H Aerus-Electrolux 984 3.76% 9/1/2014 8/31/2018 $1,234.70 $1.25 $393.60

2431 I Kacy Nails 990 3.78% 1/5/2005 7/31/2015 $1,350.38 $1.36 $396.00 1(5) year

2431 J-K Smokes & Gifts 1,646 6.29% 8/1/2013 7/31/2016 $2,206.11 $1.34 $658.40 1(5) year

2431 L Laura's Boutique 1,380 5.28% 4/1/2014 3/31/2019 $1,769.50 $1.28 $552.00 1(5) year

2431 M-Q Academy of Dance 5,170 19.76% 6/10/1996 8/31/2017 $6,462.50 $1.25 $2,068.00

2431 R1 Rent Gaurantee 1,125 4.30% 9/1/2015 8/31/2016 $1,687.50 $1.50 $450.00

2431 R2 Rent Gaurante 1,395 5.33% 9/1/2015 8/31/2016 $2,092.50 $1.50 $558.00

2441 A Yum Yum Donuts 1,316 5.03% 10/1/1996 M/M $2,303.00 $1.75 $526.40

2441 B Liberty Tax Service 384 1.47% 10/16/2010 M/M $576.00 $1.50 $153.60

2441 C Jacques Doumani 536 2.05% 3/15/2015 3/14/2017 $750.40 $1.40 $214.40

2441 D Ursula's Yarn 512 1.96% 4/20/2005 M/M $795.20 $1.55 $204.80

2441 E Farmers Insurance 601 2.30% 2/1/2007 M/M $985.60 $1.64 $240.40

2441 F Little Rockstarz 471 1.80% 3/1/2014 2/28/2016 $612.30 $1.30 $188.40

2441 G Sandra's Place 384 1.47% 9/1/2013 8/31/2016 $507.96 $1.32 $153.60

2441 H Hair By Rubin 536 2.05% 5/3/2002 M/M $785.60 $1.47 $214.40

2441 I The UltimateFacial 618 2.36% 2/1/2011 M/M $865.20 $1.40 $247.20

2441 J-K Dentist 1,112 4.25% 7/16/2001 12/31/2016 $1,703.11 $1.53 $444.80

2441 L Dog Groomer 304 1.16% 8/25/1997 M/M $631.56 $2.08 $121.60

TOTAL VACANT

TOTAL OCCUPIED 26,161 100.00% $36,416.02 $10,464.40

TOTAL 26,161 100.00% $36,416.02 $10,464.40

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For The Year Beginning Year 1Jan 2015

Year 2Jan 2016

Year 3Jan 2017

Year 4Jan 2018

Year 5Jan 2019

Year 6Jan 2020

Year 7Jan 2021

Year 8Jan 2022

Year 9Jan 2023

Year 10Jan 2024

Tenant(s) Name Kacy Nails RentGaurantee

RentGaurantee

RentGaurante

LittleRockstarzSandra's

PlaceDentist

The EnlargerAcademy of

DanceJacquesDoumani

ComputerStore

Spa RoyalAerus-

Electrolux

Laura'sBoutique

Total Number of Tenants 1 6 3 3 1

Total Square Feet 990 5,471 7,650 2,904 1,380

Total Percentage 3.8% 20.9% 29.2% 11.1% 5.3%

Cumulative Percentage 3.8% 24.7% 53.9% 65.0% 70.3%


Percentage of SF Expiring Number of Tenants Expiring Cumulative % of SF Expiring

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

55%

60%

65%

70%

Tota

l Pro

ject

Squ

are

Foot

age

0

1

2

3

4

5

6

Num

ber o

f Ten

ants

Jan 20154%

Jan 201621%

Jan 201729%

Jan 201811%

Jan 20195%

Jan 20200%

Jan 20210%

Jan 20220%

Jan 20230%

Jan 20240%

LEASE EXPIRATION SUMMARY

Any projections, opinions, assumptions or estimates used here within are for example purposes only and do not represent the current or future performance of the property.

Tenant Name: Yum Yum Donuts

Lease Commencement: October 1, 1996

Lease Expiration: Month-Month

Gross Leasable Area (GLA): 1,316

Original Term: 10 years

Option Term: 1(5) years

Pro Rata Share of Project: 5%

Headquartered: City of Industry, CA

No. of Locations: 71

Web Site: www.yumyumdonuts.com

Yum-Yum Donuts is a chain of doughnut shops based in California, founded in 1971 by Phillip C. Holland. The originallocation, at Avenue 26 and Figueroa Street in the Cypress Park district of Los Angeles, California is still in operation.The company also operates the older and larger Winchell's Donuts chain, which Yum-Yum purchased in 2004. Theheadquarters for both chains are in the City of Industry, California.

7



TENANT & LEASE SUMMARY

2431-2441 North Tustin Avenue

Santa Ana, CA 92705

Price $7,500,000

Down Payment 44% $3,300,000

Gross Leasable Area (GLA) 26,161

Price/SF $286.69

CAP Rate - Current 5.82%

CAP Rate - Pro Forma 6.72%

Lot Size 2.9 Acres

Year Built /Renovated 1976/2001

FIRST TRUST DEED

Loan Amount $4,200,000

Loan Type ProposedNew

Interest Rate 3.5%

Amortization 30 Years

Program 3.75%, 5 year

Loan to Value 56%

Annualized Operating Data

Income Current Pro FormaBase Rent

Occupied Space $436,566 $530,346

Gross Potential Rent $436,566 $530,346

Expense Reimbursements $155,962 $157,644

Gross Potential Income $592,528 $687,990

Vacancy/Collection Allowance 5% / $26,517

Effective Gross Income $592,528 $661,473

Total Expenses $155,897 $157,579

Net Operating Income $436,631 $503,894

Debt Service $226,319 $226,319

Debt Coverage Ratio 1.93 2.23

Net Cash Flow After Debt Service 6.37% / $210,312 8.41% / $277,575Principal Reduction $80,603 $80,603

Total Return 8.82% / $290,916 10.85% / $358,179

8

Location


Financing


ExpensesReal Estate Taxes $77,423 $77,423

Insurance $13,496 $13,496

CAM

Electricity $11,604 $11,604

Sewer $3,503 $3,503

Water $6,377 $6,377

Rubbish $9,600 $9,600

Landscaping $5,305 $5,305

Repairs & Maintenance $14,139 $14,139

TOTAL CAM $50,528 $50,528

Management Fee (% of EGI) 2.5% / $14,450 2.5% / $16,132

TOTAL EXPENSES $155,897 $157,579

EXPENSES/SF $5.96 $6.02


Loan information is time sensitive and subject tochange. Contact your local Marcus & Millichap CapitalCorporation representative.

FINANCIAL OVERVIEW

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PROPERTY DESCRIPTION

The Northland Shopping Center offers the rare opportunity to acquire a well located Orange County Retail Center with solid upside potential.

Located on the Tustin Avenue corridor, south of the 22 freeway and North of 17th Street, the offering features a rare combination of upside and security which is driven by the Orange County area and Tustin Avenue location. Comprised of approximately 26,171 square feet, the Northland Center features outstanding frontage on the Tustin Avenue retail corridor. The property is situated on approximately 2.9 acres of land (approximately 126,324 square feet) and is a traditional “L” shaped design. Besides the parking spaces in the front of the buildings, there is ample parking in the back of the building.

The Investment offers upside potential from three areas:1) Below Market Rents2) Vacancy3) Space to construct an additional pad building on the corner of the parcel.

Currently the tenants are paying anywhere from $1.25 to $2.08 per square foot of rentable space. There are nine tenants on month to month basis that an investor can increase the rents to $2 per square foot.

This center has a history of being 95%-100% occupied till recently. There are three vacant units which will be rent guranteed for one year at close of escrow. The Academy of Dance, Dog Groomer and Yum Yum Donuts have been a tenant since 1996 and 1997. The Dentist, Enlarger, Hair by Rubin and Chiropractor have been at the premsis from 2001 and 2003. Other long term tenants include Ursula Yarn Boutique, Kacy Nail & Spa and Farmers Insurance.

The proforma income and return provided on the offering summary and income & expenses are with the new leases at $2.00 NNN for those month to month tenants and vacant units. In addition, not noted on the proforma operating statement, the income that is generated by the build out of the corner pad will increase the cash flow of the investment.

This investment property is perfect for an investor who wants to acquire a value added property or a 1031 exchange buyer who wants a stable property with long term tenants with upside in rents, vacancy and potential income from building the pad.

Investment Highlights

■ Yum Yum Donuts

■ Two Buildings

■ Corner Pad Development Opportunity

■ Upside in Rents

■ Long Term Tenants

■ Below $300 Per Square Foot in Orange County

■ Corner Lot

■ Lot Size: 2.9 Acres

10

PROPERTY DESCRIPTIONThe Northland CenterSANTA ANA, CA


INVESTMENT OVERVIEW

The property is well maintaned with new paint and parking resurfaced and restriped. In addition, the tenats benefit from the monument sign that is provided for the exposure of their business.

11



INVESTMENT OVERVIEW

The Offering

Property The Northland Center

Property Address 2431-2441 North Tustin Avenue

Santa Ana, CA 92705

Assessor's Parcel Number 396-131-01

Zoning Commercial

Site Description

Number of Stories 1

Year Built/Renovated 1976 / 2001

Gross Leasable Area (GLA) 26,161 SF

Lot Size 2.9 Acres

Type of Ownership Fee Simple

Parking 152

Parking Ratio 5.81:1000

Landscaping grass, gravel and natural forest

Construction

Foundation monolithic slab

Framing anodized aluminum frames

Exterior masonry and wood stucco frame

Parking Surface asphalt

Roof flat roof

Mechanical

Fire Protection 100% fire sprinklered via an overhead wet system

Interior Detail

Walls Textured and painted sheetrock

Ceilings Combination textured and painted sheetrock

Floor Coverings Short loop carpeting; some hardwood

12



PROPERTY SUMMARY

Construction

Features

■ The construction components include a fireproof steelframe with steel beams and steel deck

■ Built in 1976; Renovated in 2001

■ Highly Visible Tenant Signage

■ Spacious 2.9 Acre Site

■ Ample 5.8 Parking Spaces per 1,000 Square Feet

■ 391 Feet of Frontage pn Tustin Avenue

■ Corner Location

■ Monument Signage

13



PROPERTY FEATURES

14



PROPERTY PHOTOS

15



Local Map Regional Map

AREA MAPS

16



SITE PLAN

17



PLAT MAP

18



AERIAL PHOTO


RECENT SALES

1)2)3)

The Northland CenterBristol Street Retail Shops10562-10568 Westminster Avenue11891-11915 Euclid Street

20

RECENT SALESThe Northland CenterSANTA ANA, CA


RECENT SALES MAP

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Subject BristolStreetRetailShops

10562-10568Westminster

Avenue

11891-11915EuclidStreet

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Subject BristolStreetRetailShops

11891-11915EuclidStreet

Average Price per Square Foot

21


Average Cap Rate


CAP RATE AND PRICE PER SF

1

2


2431-2441 North Tustin AvenueSanta Ana, CA 92705

Bristol Street Retail Shops2430-2530 South Bristol Street

Santa Ana, CA 92704

10562-10568 Westminster Avenue

Garden Grove, CA 92843

Close of Escrow: 3/20/2015 Major TenantsYear Built: 1955 Papa John'sGross Leasable Area (GLA): 21,225 SF Denny'sSale Price: $10,887,500Percent Down: N/ACAP Rate: 5.40%Price/SF (GLA): $512.96Lot Size: 91,040 SF

Subject Property

Year Built/Renovated: 1976 / 2001 Major TenantsGross Leasable Area (GLA): 26,161 SF Yum Yum DonutsOffering Price: $7,500,000 Academy of DancePercent Down 44% Kacy Nail & SpaCAP Rate: 5.82% Farmers InsurancePrice/SF (GLA): $286.69Lot Size: 2.9 Acres

22

Close of Escrow: 3/18/2015Year Built: 1978Gross Leasable Area (GLA): 13,523 SFSale Price: $3,475,000Percent Down: 100%CAP Rate: N/APrice/SF (GLA): $256.97Lot Size: 35,070 SF



RECENT SALES

Yum Yum Donuts

Academy of Dance

Kacy Nail & Spa

Farmers Insurance

311891-11915 Euclid Street

Garden Grove, CA 92840

23

Close of Escrow: 7/6/2015Year Built: 1976Gross Leasable Area (GLA): 7,040 SFSale Price: $2,050,000Percent Down: N/ACAP Rate: 5.44%Price/SF (GLA): $291.19Lot Size: 24,786 SF



RECENT SALES


IN ESCROW COMPARABLES

The Northland Center2431-2441 North Tustin Avenue

Santa Ana, CA 92705

Subject Property


25

IN ESCROW COMPARABLESThe Northland CenterSANTA ANA, CA


IN ESCROW COMPARABLES


ON MARKET COMPARABLES

1)2)

The Northland CenterHacienda PlazaTower Plaza

27

ON MARKET COMPARABLESThe Northland CenterSANTA ANA, CA


ON MARKET COMPARABLES MAP

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Subject HaciendaPlaza

TowerPlaza

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Subject HaciendaPlaza

TowerPlaza

Average Price per Square Foot

28


Average Cap Rate


CAP RATE AND PRICE PER SF

2

1

The Northland Center2431-2441 North Tustin Avenue

Santa Ana, CA 92705

Hacienda Plaza1623 - 1629 West Seventeenth Street

Santa Ana, CA 92706

Tower Plaza2610 West 17th Street

Santa Ana, CA 92706

Status: On Market Major TenantsYear Built: 1990 Auto InsuranceGross Leasable Area (GLA): 6,310 SF NutritionList Price: $2,460,000Percent Down: 100%CAP Rate: 4.21%Price/SF (GLA): $390.00Lot Size: 27,878 SF

Status: On Market Major TenantsYear Built: 1967 Northgate MarketGross Leasable Area (GLA): 77,610 SF College HospitalList Price: $18,935,000Percent Down: 30%CAP Rate: 6.00%Price/SF (GLA): $244.00Lot Size: 4.17 Acres

Subject Property

29




ON MARKET COMPARABLES

Yum Yum Donuts

Academy of Dance

Kacy Nail & Spa

Farmers Insurance


RENT COMPARABLES

1)2)3)4)5)6)7)8)

The Northland Center5111 West Edinger Avenue3720 Westminster Street2130 North Tustin Avenue1103 South Harbor Boulevard2031 East 1st Street715 North Harbor Boulevard1631-1641 East 17th Street401 North Bristol Street

31

RENT COMPARABLESThe Northland CenterSANTA ANA, CA


RENT COMPARABLES MAP

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Subject 5111West

EdingerAvenue

2130NorthTustin

Avenue

1103SouthHarbor

Boulevard

2031East1st

Street

715North

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1631-1641East17th

Street

401NorthBristolStreet

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Subject 5111West

EdingerAvenue

3720Westminster

Street

2130NorthTustin

Avenue

1103SouthHarbor

Boulevard

2031East1st

Street

715North

HarborBoulevard

1631-1641East17th

Street

401NorthBristolStreet

32


Average Rent per Square Foot


OCCUPANCY AND AVERAGE RENT PER SF

Average Occupancy

2

1

Subject Property

5111 West Edinger Avenue

Santa Ana, CA 92704

3720 Westminster Street

Santa Ana, CA 92703

Date Surveyed: 7/13/2015

Occupancy: 0%

Year Built: N/A

Gross Leasable Area (GLA): 3,700 SF

Rent/SF (GLA): $2.00-$3.00

Available SF: 3,700

Lot Size: 3,700 SF

Lease Type: NNN


Occupancy: 98%

Year Built: 1988


Rent/SF (GLA): $2.00

Available SF: 1,440

Lot Size: 248,182 SF

Lease Type: NNN

Date Surveyed: Major Tenants

Occupancy: Yum Yum Donuts

Year Built/Renovated: 1976/2001 Academy of Dance

Gross Leasable Area (GLA): 26,161 SF Kacy Nail & Spa

Rent/SF (GLA): Farmers Insurance

Available SF:

Lot Size: 2.9 Acres

Lease Type:


2431-2441 North Tustin Avenue

Santa Ana, CA 92705

33



RENT COMPARABLES

5

4

32130 North Tustin Avenue

Santa Ana, CA 92705

1103 South Harbor Boulevard

Santa Ana, CA 92704

2031 East 1st Street

Santa Ana, CA 92705


Occupancy: 86%

Year Built: 1990



Available SF: 2,272

Lot Size: 43,560 SF

Lease Type: NNN


Occupancy: 90%

Year Built: N/A



Available SF: 825

Lot Size: 30,410 SF

Lease Type: NNN


Occupancy: 95%

Year Built: 1965



Available SF: 1,600

Lot Size: 91,476 SF

Lease Type: NNN

34



RENT COMPARABLES

8

7

6715 North Harbor Boulevard

Santa Ana, CA 92703

1631-1641 East 17th Street

Santa Ana, CA 92705

401 North Bristol Street

Santa Ana, CA 92703


Occupancy: 85%

Year Built: N/A



Available SF: 1,700

Lot Size: 24,084 SF

Lease Type: NNN


Occupancy: 82%

Year Built: 1978



Available SF: 2,150

Lot Size: 1.20 AC

Lease Type: NNN


Occupancy: 84%

Year Built: 1990



Available SF: 1,336

Lot Size: 28,837 SF

Lease Type:

35



RENT COMPARABLES


MARKET OVERVIEW

37

MARKET OVERVIEWThe Northland CenterSANTA ANA, CA

Orange County

Market Highlights

Diversified employment base

■ Major employers include those in tourism, high-tech

operations and aerospace/military contracting.

Extensive foreign investment

■ Numerous foreign firms place headquarters in the

area to be near Southern California ports of entry

and the Southwest.

High median household income

■ The median household income in Orange County is

far above the national level.

Geography

Located in the heart of Southern California, Orange

County’s land area covers 790 square miles, bordering

the counties of Los Angeles, San Diego, Riverside and

San Bernardino. Elevations range from sea level at the

coast to 5,687 feet at Santiago Peak in the Saddleback

Mountains. The western edge of Orange County is

defined by 42 miles of Pacific Ocean beachfront,

comprising one of the longest uninterrupted stretches of

public beaches in the world.


ORANGE COUNTY

38

MARKET OVERVIEW

Largest Cities in County by Population


* ForecastSources: Marcus & Millichap Research Services, U.S. CensusBureau, Experian

Metro

The population of the Orange County metro soared

during the 1980s and 1990s and today contains

approximately 3.1 million residents. Anaheim is the

largest city in the county, with 348,300 citizens,

followed closely by Santa Ana. By the end of 2019, the

county is expected to gain more than 78,000 new

residents, with the city of Irvine registering the most

dramatic growth.

InfrastructureInterstates 5 and 405, along with three major freeways

— State Routes 91, 22, 55 and 57 — serve as the

primary arteries for surface transportation within

Orange County. In addition, toll roads throughout the

county aid in reducing traffic congestion.

As a result of growing populations in cities such as

Tustin and Irvine, efforts are being made to expand

State Route 241. This would help alleviate traffic on

Interstate 5 by offering an easier route to the northern

portion of the county and Riverside County.

Although John Wayne International Airport is the only

commercial-service airport in Orange County, three

additional international airports are located nearby in

Long Beach, Ontario and Los Angeles.

Bus service for the county is provided by the Orange

County Transportation Authority, while Metrolink

operates three commuter rail lines through the region.


Anaheim 351,000

Santa Ana 335,900Irvine 226,000

Huntington Beach 196,300

Garden Grove 176,300

Orange 141,600

Airports

■ John Wayne International Airport■ One general aviation airport - Fullerton Airport

Major Roadways■ Interstates 5 and 405■ State Routes 1, 22, 55, 57, 91 and 241

Rail■ Freight - Union Pacific■ Passenger - Amtrak■ Commuter - Metrolink

Orange County is:■ 30 miles from Los Angeles■ 90 miles from San Diego■ 110 miles from the Mexican border■ 270 miles from Las Vegas

ORANGE COUNTY

39


* ForecastSources: Marcus & Millichap Research Services, Bureau ofEconomic Analysis, Moody's Analytics, U.S. Census Bureau,Fortune

Economy

The aerospace and technology industries make up a

significant portion of Orange County’s economy, creating

products that are sold to national and global markets.

Defense spending has built a strong local aerospace

market, and the improving economy has boosted tech

sales. Employment in the missile and space industry

remains high, while manufacturers of aircraft parts

continue to produce equipment to meet government

needs. Homeland security and defense contracts for

technology and telecommunications-related goods also

support Orange County’s smaller electronics firms.

The travel and tourism industry is improving in line with

national employment growth. The overhaul of Disney’s

California Adventure theme park is one of the more recent

tourist expansions. The company added 12 acres to the

existing 55-acre site and used the space for new attractions.

Orange County’s high-tech sector is recording a revival as

major companies move to the area. Private research and

development, coupled with work done at numerous

universities, will play a vital role in the growing high-tech

base, which offers employment at companies such as

Broadcom and Google. Medical-device research and

production is also expanding at companies such as

Beckman Coulter, Endologix, Edwards Lifesciences and

Allergan.


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40


Labor

The Orange County economy contains an employment base of nearly 1.5 million workers. After outpacing the

nation’s average rate of employment growth for the previous five years, the county will match the national pace of

1.3 percent annually through 2019.

At 18 percent of total metro employment, the professional and business services sector represents the largest share

of area jobs. Some 273,000 positions exist in these industries, and jobs are expected to expand by 2.5 percent

annually in the coming four years, which bodes well for the local office market. The trade, transportation and

utilities segment is the next largest employment provider, comprising 17 percent of total payrolls. A considerable

portion of jobs here are in retail. Growth in this sector is forecast to average 0.8 percent annually through 2019.

Given the metro’s numerous attractions and beaches, the leisure and hospitality sector is another key component

of the Orange County economy. Employment in this sector nears 193,000 jobs, or 13 percent of the employment

force. After taking a significant hit during the recession, average hotel occupancy in the county is on the rise. This

will translate into increased hiring as coastal resorts and hotels, restaurants, theme parks, and travel-related firms

add jobs to meet increased demand. Over the next five years, leisure and hospitality payrolls will expand 1.7

percent annually.

Through 2019, all employment sectors will expand, with the largest gains in education and health services, and

professional and business services sectors. These two sectors will grow at an average pace of 2.5 percent each year.


* ForecastSources: Marcus & Millichap Research Services, BLS, Moody's Analytics

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Major Employers

Employers

The Walt Disney Co. is one of Orange County’s most

notable employers, providing positions for thousands of

mainly service workers. Disneyland serves as the metro’s

main tourist attraction, encompassing two theme parks,

a lively entertainment district and three hotels.

Disneyland and California Adventure theme parks offer

an array of entertainment, shopping and dining options.

The University of California, Irvine, is a major

employer in the county and home to the UC Irvine

College of Medicine and the UC Irvine Medical Center.

The UC Irvine College of Medicine provides scholarly

research, physician education, and high-quality care to

patients. Other healthcare companies include Tenet

Healthcare System, Kaiser Permanente and St. Joseph

Health Systems.

Boeing Co. employs thousands of people across multiple

sites in Orange County. Several years ago, the company

switched its operations from strictly airplane

manufacturing to an integrated aerospace conglomerate.

The metro’s manufacturing centers in Anaheim and Seal

Beach support the space and communications sectors of

the company, which focus on global positioning system

satellite construction and defense electronics. In

addition, high-tech companies such as Broadcom and

Google provide the county with many high-quality jobs.

* ForecastSources: Marcus & Millichap Research Services, BLS, Moody'sAnalytics, Experian


University of California, Irvine

The Walt Disney Co.

St. Joseph Health Systems

Boeing Co.

Bank of America Corp.

Memorial Care Health System

Cedar Fair LP

Kaiser Permanente

Target Corp.

Hoag Memorial Hospital Presbyterian

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Demographics

Orange County is one of the most populous counties in

the nation, with more than 3.1 million residents. From

2000 to 2010, the area added more than 163,400

residents, a yearly pace of 0.6 percent. Development

constraints throughout Orange County will curb

population growth to a pace of 0.5 percent annually

through 2019.

An increase in employment will attract young workers

to the county. The population in the 25- to 44-year-

old age group accounts for 28 percent of the total

population. The influx of a youthful labor force has

kept the median age at 36.6 years, lower than the

national level. Many of these workers are well educated.

During 2014, 36.7 percent of residents age 25 and

older had attained a bachelor’s degree, compared with

28.5 percent for the U.S.

The high median home price in Orange County is a

major concern for the region, as rising prices have

already limited population gains and homeownership.

Last year, 58 percent of residents owned their homes. A

growing economy is expected to create higher-paying

jobs, which will allow some residents to purchase

homes. In addition, through 2019, the increase in

household incomes is expected to outpace the rise in

home prices.

* ForecastSources: Marcus & Millichap Research Services, AGS, Experian,Moody's Analytics, U.S. Census Bureau


ORANGE COUNTY

43


The information contained in the market overview comes from sources deemed to be reliable, however, no representation, warranty or guarantee, express or implied, may be made as to the accuracy or reliability of the information contained herein. The most timely data available at time of production, including estimates and forecasts, were used and may be subject to revision.

Quality Of Life

From fishing to yachting, water sports of every kind

abound at the beaches, harbors and marinas that dot

the Orange County coast. Many of its beaches are

famous for surfing, and the town of Huntington Beach

is known worldwide as “Surf City, USA.” The weather

is also perfect for golfing on world-class courses, and

the mountains provide challenging hiking and

mountain biking. Orange County residents can use a

surfboard, wakeboard and snowboard all in one day.

The area boasts big attractions such as Disneyland and

Knott’s Berry Farm while providing local events such as

the summer-long Laguna Beach Festival of

Arts/Pageant of the Masters and Broadway-quality

entertainment at the Segerstrom Center for the Arts.

Orange County also hosts two major sports teams.

Major League Baseball’s Los Angeles Angels make their

home at Angel Stadium of Anaheim, and the NHL’s

Anaheim Ducks play at the Honda Center, also in

Anaheim.

There are 31 school districts in Orange County,

encompassing 540 educational institutions. There are

also two public universities — California State

University, Fullerton, and the University of California,

Irvine — and more than 20 private universities,

including Chapman University and Concordia

University, Irvine.

* ForecastSources: Marcus & Millichap Research Services, NationalAssociation of Realtors®, Moody's Analytics, U.S. CensusBureau


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MARKET OVERVIEW

Buyers and Sellers Coming Together on Pricing; Deal Flow Rising

Retail operations are strengthening in the wake of broad-based employment growth in the current expansionarycycle. In the early stages of the recovery, the leisure and hospitality, and education and health services sectors werethe primary contributors to job gains as tourism returned to the county and the aging population demandedadditional healthcare. More recently, however, nearly every sector has added jobs at a significant pace, which issupporting consumer spending through most income brackets. As a result, dark, in-line space is beginning toattract smaller tenants, a welcome sign for owners who have dealt with significant vacancy for several years.Vacancy at small, open-air centers has improved 160 basis points since the previous peak and should dip below the5 percent threshold by the end of this year. This space is the key to more substantial rent gains in the retail sector,which has lagged improvements in other property types. As a result, asking rent growth will surpass 5 percent forthe second consecutive year.

The pricing expectations gap between buyers and sellers is closing, which will support transaction velocity in themulti-tenant sector this year. Investors are eagerly awaiting listings that meet their parameters in the county, whileowners have been riding out the recovery in an effort to put performing properties on the market. The potentialfor a higher cost of capital is eroding buyers’ expectations and expanding the field of potential acquisitions. At thesame time, potential sellers are enjoying better occupancy and rents, which is lifting valuations to a level sellers aremore comfortable achieving. As a result, average cap rates have dipped to near 5 percent for properties occupied bynational credit tenants in coastal neighborhoods, and move up approximately 150 basis points away from thecoast. Single-tenant deals, meanwhile, will remain highly sought after, though limited construction will temper thepace of trades. Drugstore and fast-food restaurants begin in the 5 percent range.


Employment: After 44,800 jobs were created during 2014, employers will add39,000 positions this year, representing 2.6 percent growth. Gains will be broadbased, though the professional and business services, and education and healthservices sectors will be among the leading segments.

Construction: Developers will wrap up construction on 1.1 million square feet ofretail space this year, lifting local retail stock by 0.9 percent. Last year, 270,000square feet was completed.

Vacancy: The pace of vacancy improvements will ease in the coming months due tospeculative construction. By year-end 2015, vacancy will fall to 4.3 percent, anannual decrease of 50 basis points.

Rents: As vacancy improves, asking rents will advance 5.1 percent in 2015 to $25.62per square foot, building on last year’s 7.0 percent rise. Average rents will finish theyear approximately 14 percent below the previous peak.

2015 Annual Retail Forecast


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Economy

■ Employers added approximately 19,000 jobs in Orange County in the first quarter, lifting 12-month payrollgrowth to 52,600 jobs, or 3.5 percent. Payrolls broached the pre-recession peak in the first quarter.

■ Nine of the 11 employment sectors added jobs during the most recent 12-month period. The informationsector shed positions during the period as a few hundred jobs were eliminated. Professional and businessservices led growth with nearly 11,200 new positions.

■ Retail sales growth remained consistent year over year as household formation and job gains supportedspending. In the year-long period ending in the first quarter, retail sales jumped 3.4 percent and now restapproximately 8 percent above the previous peak.

■ Outlook: After 44,800 jobs were created during 2014, employers will add 39,000 positions this year,representing 2.6 percent growth. Gains will be broad based, though the professional and business services, andeducation and health services sectors will be among the leading segments.


Construction

■ Development has been relatively constrained during the past 12 months. Only 250,000 square feet wasdelivered to the metro during that time, up from 190,000 square feet during the prior year.

■ More than 1 million square feet is currently underway in the market, including two major projects that accountfor the bulk of 2015’s anticipated deliveries. The Source in Buena Park and the Outlets at San Clemente willadd 750,000 square feet of space to inventory this year.

■ At the end of the first quarter, pre-leasing activity stood at less than 20 percent due to a lack of commitments atthe major projects currently underway in the county. Leases for 50 percent of the space in the Source could beinked shortly.

■ Outlook: Developers will wrap up construction on 1.1 million square feet of retail space this year, lifting localretail stock by 0.9 percent. Last year, 270,000 square feet was completed.

* ForecastSources: BLS; CoStar Group, Inc.

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Vacancy

■ Vacancy declined 30 basis points in the first quarter to 4.5 percent, which is 90 basis points lower than duringthe same period one year ago. The rate now rests 180 basis points below the cyclical peak.

■ In the past year, traffic-generating power centers reported a 40-basis-point dip in vacancy to 3 percent. Mallvacancy, meanwhile, inched up 30 basis points to 4.8 percent.

■ At smaller open-air properties, including neighborhood/community and strip centers, vacancy plunged 150basis points to 5.4 percent during the past year, a welcome sign for the sector that has been last to recover.

■ Outlook: The pace of vacancy improvements will ease in the coming months due to speculative construction.By year-end 2015, vacancy will fall to 4.3 percent, an annual decrease of 50 basis points.

Rents

■ Rent growth has been strong over the past 12 months as conditions have tightened. Asking rents for availablespace climbed 6.1 percent to $24.23 per square foot in the year-long period ending in the first quarter, wellabove the modest 0.1 percent increase in the prior year.

■ Neighborhood/community center rents are edging high as vacancy has gained traction. In the first quarter,asking rents were $23.09 per square foot, up 4.3 percent over the past year. Asking rents in this sector areapproximately 20 percent below the previous peak.

■ Rent growth in the North County submarket lagged overall gains as asking rents inched up 2.2 percent to$19.37 per square foot over the past year. The Airport Area and Central County submarkets recorded above-average rent increases in the last year.

■ Outlook: As vacancy improves, asking rents will advance 5.1 percent in 2015 to $25.62 per square foot,building on last year’s 7.0 percent rise. Average rents will finish the year approximately 14 percent below theprevious peak.


* ForecastSource: CoStar Group, Inc.

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Single-Tenant Sales Trends**

■ Single-tenant deal flow advanced 7 percent during the most recent 12-month period as investors remainedinterested in local properties. Restaurants were among the sectors that posted higher velocity.

■ Prices for single-tenant properties vary significantly by tenant. Over the past year, restaurants traded for anaverage price of close to $750 per square foot, while a new drugstore can trade for more than $1,000 per squarefoot.

■ Average cap rates remain compressed as plenty of capital awaits listings. Fast-food restaurants with corporate-backed leases and drugstores trade at cap rates below the 5 percent threshold.

■ Outlook: Buyers remain eager to purchase single-tenant assets in Orange County, which is keeping spreadslow. Investors are pursuing properties with short-term lease expirations in good locations that can berepositioned and re-tenanted with higher rents.

Multi-Tenant Sales Trends**

■ Additional multi-tenant investors are active in the submarket, though listings that meet their criteria arelimited. Sales velocity over the past year was flat compared with the previous year.

■ During the most recent 12-month period, average prices ticked up a modest 2 percent to $384 per square foot.Investors purchased larger properties during the period as risk aversion dissipated.

■ Average cap rates are in the 5 percent range, down approximately 30 basis points year over year. The spreadbetween first-year returns between the coast and inland for similar properties is approximately 100 to 200 basispoints.

■ Outlook: More owners will consider selling this year as pressure on cap rates begins to turn around with higherinterest rates. Investors eager to hold real estate in the popular market will move quickly to acquire properties.


ORANGE COUNTY

** Trailing 12 months through first quarterSources: CoStar Group, Inc.; Real Capital Analytics

48



ORANGE COUNTY

Capital Markets

■ The Fed recently indicated that it may raise its short-term lending benchmark as early as June, thoughSeptember is the most likely target as the central bank awaits further tightening in the labor market andstronger wage growth. Against the prospect of an inevitable rise in interest rates, investors remain highlymotivated to purchase retail assets and debt providers continue to compete for market share while alsomaintaining underwriting discipline.

■ Loan-to-value ratios generally range from 60 percent to 75 percent, depending on asset age and quality,location, tenant mix, and tenant credit rating. Multi-tenant assets with strong anchors and a stable mix ofnational in-line tenants remain preferred. Debt-service ratios range from 1.25x to 1.35x and debt yields of 8 to9 percent. Financing for bridge loans for stabilized assets typically carry a 65 to 70 percent LTV and spreadsrange 250 basis points to 425 basis points over LIBOR. Repositioned assets are underwritten at 80 percent ofcost with a spread between 300 basis points to 475 basis points over LIBOR.

■ Lending rates remain low for performing assets in primary markets. All-in rates for five-year retail loanstypically start in the mid- to high-3 percent range, while seven- and 10-year loans price between 3.7 percentand 4.4 percent. Loans up to 20 years range from 4.8 percent to 5.85 percent.

■ CMBS lenders participated in slightly more than 50 percent of loans in the tertiary markets, and nationalbanks funded 25 percent. Banks, both national and regional/local, have increased their market share in allmarkets.

Local Highlights

■ Orange County is facing a shortage of approximately 50,000 homes in the wake of strong population growth.As pressure to approve new neighborhoods mounts on local city councils, homebuilding should begin toaccelerate, supporting the sale of big-ticket items.

■ Broadcom recently purchased land to develop a new headquarters in Great Park Neighborhoods. The 1.1million-square-foot campus will house thousands of jobs beginning in 2017 and could expand to 2 millionsquare feet. Retailers in the area should benefit from the rise in traffic.

■ Bruster’s, an East Coast ice cream shop, is expanding into Southern California and could open as many as sixstores in Orange and Los Angeles counties. The first store opened in Cypress early in the second quarter.Nationally, the chain has more than 200 units.

■ Austin-based burger joint Hopdoddy Burger Bar will open three restaurants in Southern California. The firstunit will be in Newport Beach’s Fashion Island this summer, along with Playa Vista and El Segundo locations.

49


Orange County

Market Highlights

Diversified employment base

■ Major employers include those in tourism, high-tech

operations and aerospace/military contracting.

Extensive foreign investment

■ Numerous foreign firms place headquarters in the

area to be near Southern California ports of entry

and the Southwest.

High median household income

■ The median household income in Orange County is

far above the national level.

Geography

Located in the heart of Southern California, Orange

County’s land area covers 790 square miles, bordering

the counties of Los Angeles, San Diego, Riverside and

San Bernardino. Elevations range from sea level at the

coast to 5,687 feet at Santiago Peak in the Saddleback

Mountains. The western edge of Orange County is

defined by 42 miles of Pacific Ocean beachfront,

comprising one of the longest uninterrupted stretches of

public beaches in the world.


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MARKET OVERVIEW

Largest Cities in County by Population


* ForecastSources: Marcus & Millichap Research Services, U.S. CensusBureau, Experian

Metro

The population of the Orange County metro soared

during the 1980s and 1990s and today contains

approximately 3.1 million residents. Anaheim is the

largest city in the county, with 348,300 citizens,

followed closely by Santa Ana. By the end of 2019, the

county is expected to gain more than 78,000 new

residents, with the city of Irvine registering the most

dramatic growth.

InfrastructureInterstates 5 and 405, along with three major freeways

— State Routes 91, 22, 55 and 57 — serve as the

primary arteries for surface transportation within

Orange County. In addition, toll roads throughout the

county aid in reducing traffic congestion.

As a result of growing populations in cities such as

Tustin and Irvine, efforts are being made to expand

State Route 241. This would help alleviate traffic on

Interstate 5 by offering an easier route to the northern

portion of the county and Riverside County.

Although John Wayne International Airport is the only

commercial-service airport in Orange County, three

additional international airports are located nearby in

Long Beach, Ontario and Los Angeles.

Bus service for the county is provided by the Orange

County Transportation Authority, while Metrolink

operates three commuter rail lines through the region.


Anaheim 351,000

Santa Ana 335,900Irvine 226,000

Huntington Beach 196,300

Garden Grove 176,300

Orange 141,600

Airports

■ John Wayne International Airport■ One general aviation airport - Fullerton Airport

Major Roadways■ Interstates 5 and 405■ State Routes 1, 22, 55, 57, 91 and 241

Rail■ Freight - Union Pacific■ Passenger - Amtrak■ Commuter - Metrolink

Orange County is:■ 30 miles from Los Angeles■ 90 miles from San Diego■ 110 miles from the Mexican border■ 270 miles from Las Vegas

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* ForecastSources: Marcus & Millichap Research Services, Bureau ofEconomic Analysis, Moody's Analytics, U.S. Census Bureau,Fortune

Economy

The aerospace and technology industries make up a

significant portion of Orange County’s economy, creating

products that are sold to national and global markets.

Defense spending has built a strong local aerospace

market, and the improving economy has boosted tech

sales. Employment in the missile and space industry

remains high, while manufacturers of aircraft parts

continue to produce equipment to meet government

needs. Homeland security and defense contracts for

technology and telecommunications-related goods also

support Orange County’s smaller electronics firms.

The travel and tourism industry is improving in line with

national employment growth. The overhaul of Disney’s

California Adventure theme park is one of the more recent

tourist expansions. The company added 12 acres to the

existing 55-acre site and used the space for new attractions.

Orange County’s high-tech sector is recording a revival as

major companies move to the area. Private research and

development, coupled with work done at numerous

universities, will play a vital role in the growing high-tech

base, which offers employment at companies such as

Broadcom and Google. Medical-device research and

production is also expanding at companies such as

Beckman Coulter, Endologix, Edwards Lifesciences and

Allergan.


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Labor

The Orange County economy contains an employment base of nearly 1.5 million workers. After outpacing the

nation’s average rate of employment growth for the previous five years, the county will match the national pace of

1.3 percent annually through 2019.

At 18 percent of total metro employment, the professional and business services sector represents the largest share

of area jobs. Some 273,000 positions exist in these industries, and jobs are expected to expand by 2.5 percent

annually in the coming four years, which bodes well for the local office market. The trade, transportation and

utilities segment is the next largest employment provider, comprising 17 percent of total payrolls. A considerable

portion of jobs here are in retail. Growth in this sector is forecast to average 0.8 percent annually through 2019.

Given the metro’s numerous attractions and beaches, the leisure and hospitality sector is another key component

of the Orange County economy. Employment in this sector nears 193,000 jobs, or 13 percent of the employment

force. After taking a significant hit during the recession, average hotel occupancy in the county is on the rise. This

will translate into increased hiring as coastal resorts and hotels, restaurants, theme parks, and travel-related firms

add jobs to meet increased demand. Over the next five years, leisure and hospitality payrolls will expand 1.7

percent annually.

Through 2019, all employment sectors will expand, with the largest gains in education and health services, and

professional and business services sectors. These two sectors will grow at an average pace of 2.5 percent each year.


* ForecastSources: Marcus & Millichap Research Services, BLS, Moody's Analytics

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Major Employers

Employers

The Walt Disney Co. is one of Orange County’s most

notable employers, providing positions for thousands of

mainly service workers. Disneyland serves as the metro’s

main tourist attraction, encompassing two theme parks,

a lively entertainment district and three hotels.

Disneyland and California Adventure theme parks offer

an array of entertainment, shopping and dining options.

The University of California, Irvine, is a major

employer in the county and home to the UC Irvine

College of Medicine and the UC Irvine Medical Center.

The UC Irvine College of Medicine provides scholarly

research, physician education, and high-quality care to

patients. Other healthcare companies include Tenet

Healthcare System, Kaiser Permanente and St. Joseph

Health Systems.

Boeing Co. employs thousands of people across multiple

sites in Orange County. Several years ago, the company

switched its operations from strictly airplane

manufacturing to an integrated aerospace conglomerate.

The metro’s manufacturing centers in Anaheim and Seal

Beach support the space and communications sectors of

the company, which focus on global positioning system

satellite construction and defense electronics. In

addition, high-tech companies such as Broadcom and

Google provide the county with many high-quality jobs.

* ForecastSources: Marcus & Millichap Research Services, BLS, Moody'sAnalytics, Experian


University of California, Irvine

The Walt Disney Co.

St. Joseph Health Systems

Boeing Co.

Bank of America Corp.

Memorial Care Health System

Cedar Fair LP

Kaiser Permanente

Target Corp.

Hoag Memorial Hospital Presbyterian

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Demographics

Orange County is one of the most populous counties in

the nation, with more than 3.1 million residents. From

2000 to 2010, the area added more than 163,400

residents, a yearly pace of 0.6 percent. Development

constraints throughout Orange County will curb

population growth to a pace of 0.5 percent annually

through 2019.

An increase in employment will attract young workers

to the county. The population in the 25- to 44-year-

old age group accounts for 28 percent of the total

population. The influx of a youthful labor force has

kept the median age at 36.6 years, lower than the

national level. Many of these workers are well educated.

During 2014, 36.7 percent of residents age 25 and

older had attained a bachelor’s degree, compared with

28.5 percent for the U.S.

The high median home price in Orange County is a

major concern for the region, as rising prices have

already limited population gains and homeownership.

Last year, 58 percent of residents owned their homes. A

growing economy is expected to create higher-paying

jobs, which will allow some residents to purchase

homes. In addition, through 2019, the increase in

household incomes is expected to outpace the rise in

home prices.

* ForecastSources: Marcus & Millichap Research Services, AGS, Experian,Moody's Analytics, U.S. Census Bureau


ORANGE COUNTY

55


The information contained in the market overview comes from sources deemed to be reliable, however, no representation, warranty or guarantee, express or implied, may be made as to the accuracy or reliability of the information contained herein. The most timely data available at time of production, including estimates and forecasts, were used and may be subject to revision.

Quality Of Life

From fishing to yachting, water sports of every kind

abound at the beaches, harbors and marinas that dot

the Orange County coast. Many of its beaches are

famous for surfing, and the town of Huntington Beach

is known worldwide as “Surf City, USA.” The weather

is also perfect for golfing on world-class courses, and

the mountains provide challenging hiking and

mountain biking. Orange County residents can use a

surfboard, wakeboard and snowboard all in one day.

The area boasts big attractions such as Disneyland and

Knott’s Berry Farm while providing local events such as

the summer-long Laguna Beach Festival of

Arts/Pageant of the Masters and Broadway-quality

entertainment at the Segerstrom Center for the Arts.

Orange County also hosts two major sports teams.

Major League Baseball’s Los Angeles Angels make their

home at Angel Stadium of Anaheim, and the NHL’s

Anaheim Ducks play at the Honda Center, also in

Anaheim.

There are 31 school districts in Orange County,

encompassing 540 educational institutions. There are

also two public universities — California State

University, Fullerton, and the University of California,

Irvine — and more than 20 private universities,

including Chapman University and Concordia

University, Irvine.

* ForecastSources: Marcus & Millichap Research Services, NationalAssociation of Realtors®, Moody's Analytics, U.S. CensusBureau


ORANGE COUNTY

56

MARKET OVERVIEW

Buyers and Sellers Coming Together on Pricing; Deal Flow Rising

Retail operations are strengthening in the wake of broad-based employment growth in the current expansionarycycle. In the early stages of the recovery, the leisure and hospitality, and education and health services sectors werethe primary contributors to job gains as tourism returned to the county and the aging population demandedadditional healthcare. More recently, however, nearly every sector has added jobs at a significant pace, which issupporting consumer spending through most income brackets. As a result, dark, in-line space is beginning

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